How will a credit card allowing balance transfers help me?
21 April 2008
Balance transfers can be a great way to help get out of credit card debt, but this requires some planning and dedication on your part if it is to work. To make the most of balance transfers, you will need to look at three elements: the amount you can repay each month, the features of the card you are switching to, and if you can afford to not have a line of credit for up to a year.
You must have reached a financially stable enough position to make significant repayments on your credit card debt if balance transfers are to be of any use to you. If all you intend to repay is the minimum repayment during the period, then you will likely have gained almost nothing. You must be ready to make the most of the time you have for low interest balance transfers, or else there is little point to risking your credit rating with a change of credit card.
The features of the card you change to must include low interest or interest free balance transfers for a significant number of months to be useful. You will also need to decide whether the annual fee you will need to pay will be worth the change. Figure out the fewest number of months you could pay your debt off in, then if there is a credit card that can accommodate this entire time in its interest free balance transfers period, add the annual fee to the total amount of debt. If you could still pay this off in the next month, then you may want to consider that card as offering you a good deal on balance transfers.
If you can't afford not to have a line of credit for the time you are paying off your card, then balance transfers will not be of use to you. Often when you are paying off your card, balance transfers are the first things to be paid off, meaning any new purchases you make are almost sure to accrue interest. You won't be able to use your credit card while you are repaying your debt, so make sure this won';t burden you too much before considering credit cards with deals on balance transfers.
Please visit our comparison pages for more information on many different debt reduction credit cards using balance transfers.
Top Rated Australian Credit Cards
